Osaka casino pachinko Wynn Caesars MGM

Given the enormous popularity of legal pachinko games in Japan, casino operators are clamoring for a shot at a soon-to-be legal Osaka casino (Image: tokyoweekender)

The race for a casino in Japan is starting to heat up, and it seems as though Osaka may be the top target of investors and casino developers worldwide. At the moment, at least three major casino operators are in talks with the Osaka government about plans to build a massive casino resort – one that could cost up to 500 billion yen ($4.8 billion) to complete.

Aiming for Olympic Game Openings

And all of these talks are taking place even before Japan has actually legalized casino gambling. Most operators expect them to do so in time for the first casinos to go live before the 2020 Summer Olympics, which will be hosted by Tokyo.

“It’s just a matter of time before casinos are legalized,” said Ichiro Matsui, Osaka Prefecture Governor.

Osaka officials met with representatives from Caesars Entertainment and Genting Singapore last year, and expect to sit down with a group from MGM Resorts International early this year. All three are looking to place a casino in Osaka, the second-largest city in Japan.

The casino would likely be placed on reclaimed land owned by the city – specifically, Yumeshima, an island in Osaka Bay. The idea –  from Osaka’s perspective – is to get a jump on Tokyo, which might be the prime target of many developers once casino gambling is legalized. Members of both the ruling Liberal Democratic Party and the opposition Japan Restoration Party have said that they’ll be looking to legalize casinos in the upcoming Diet legislative session, which starts this month.

Anticipating Legalization

“Even before the casino bill is passed, Osaka is crafting details of the resort plan so that we could embark on the project at any time,” Matsui said. “We’d need global casino-operators’ involvement and expertise, as the business is new to Japan.”

Nobody disputes the fact that an Osaka casino could be big business for the local economy and developers alike. One report by CLSA Asia-Pacific Markets estimates that a gaming resort in Osaka could generate up to $5 billion a year in gross gaming revenue. The Union Gaming Group – an industry analyst outfit – estimates that legal casinos could turn Japan into the world’s second-largest gambling market, with $10 billion in annual revenue possible.

That’s why major casino companies have made it public knowledge that they’re willing to make a big investment in Japan. Wynn Resorts has said that they’ll consider investing more than $4 billion in Japanese casino resorts, while Galaxy Entertainment Group has put their potential investment at $5 billion or more, though that figure could include investments in Taiwan as well.

Osaka is a particularly enticing area to develop in, as land costs are much lower than in Japan. In the bayside area of the city, land costs just about one-tenth as much as in Tokyo’s Odaiba area, where multiple companies are considering building entertainment resorts.

Some companies are already in talks with local partners as well. Caesars has discussed potential partnerships with gaming machine makers like Konami and Sega Sammy Holdings, part of ten years of talks in anticipation of changes in Japanese law.

Under current Japanese law, casino gambling is illegal, but many other forms of gambling are not. Individuals may place bets on horse racing, boat and bicycle races, and can also participate in state lotteries. Another popular form of gambling is pachinko, a machine-based game that’s similar to a cross between slot machines and pinball.